TSMC ramps packaging capacity

Taiwan Semiconductor Manufacturing is racing to expand the packaging step that turns advanced chips into usable artificial intelligence processors. (tsmc.com) That packaging is called Chip on Wafer on Substrate, or CoWoS: it places multiple chip pieces side by side on a silicon base so processors and high-bandwidth memory can talk faster inside one package. Taiwan Semiconductor Manufacturing says the technology is built for artificial intelligence and supercomputing workloads. (tsmc.com) Industry reports say the company now aims to lift monthly CoWoS capacity to 120,000 to 130,000 wafers by the end of 2026, up from roughly 75,000 to 80,000 wafers now. The expansion is centered on new packaging sites in Taiwan as customers keep ordering more artificial intelligence chips. (trendforce.com) The demand signal is already visible in sales. Taiwan Semiconductor Manufacturing reported first-quarter 2026 revenue of NT$1.13 trillion, or about $35.6 billion, up 35% from a year earlier, with March revenue alone rising 45.2% to NT$415.2 billion. (cnbc.com) The company’s investor relations page shows first-quarter revenue landed above its own guidance range of $32.2 billion to $33.4 billion. It also posted gross margin of 63.0% to 65.0% and operating margin of 54.0% to 56.0% for the quarter. (investor.tsmc.com) Packaging has become a choke point because the most advanced artificial intelligence chips need more than wafer fabrication. They also need memory and logic bound together in one dense package before Nvidia, Apple, or other designers can ship finished products. (tsmc.com, cnbc.com) Taiwan Semiconductor Manufacturing is also widening its United States footprint as it tries to spread more production outside Taiwan. On its Arizona site, the company says its investment has grown to $165 billion and now includes six wafer fabrication plants, two advanced packaging facilities, and a research and development center in Phoenix. (tsmc.com) The Arizona project is already partly in production. Taiwan Semiconductor Manufacturing says high-volume output on its N4 process started in the fourth quarter of 2024, while a second plant is targeting volume production on N3 in the second half of 2027 and a third plant is planned for N2 and A16 technologies by the end of the decade. (tsmc.com) Even with that buildout, supply risks have not gone away. Reporting in March said the war in Iran had taken about one-third of global helium supply off the market, a problem for chipmakers because helium is used in semiconductor manufacturing and is hard to replace quickly. (cen.acs.org, thehill.com) For now, the story is simple: artificial intelligence demand is no longer straining only chip design and wafer production. It is straining the final assembly layer too, and Taiwan Semiconductor Manufacturing is spending across Taiwan and Arizona to keep that bottleneck from slowing the next wave of servers. (tsmc.com, tsmc.com, cnbc.com)